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http://www.ge.com/annual01/letter/index.html
. To our share owners, Customers and employees2001 was a time of transition at GE We would like to thank Jack Welch - on behalf of our share owners, customers and employees - for his 40 years of excellence at GE Jack has had a personal impact. On Thousand. in His 21 Year As Chairlman, He Had a Profound Impact on Ge.
Jack has many remarkable talents. But he is, first and foremost, a teacher. In that vein, we renamed our management institute at Crotonville the "John F. Welch Learning Center." Every year, 5,000 GE executives and 1,000 customers from around the world come to work and learn at this center at Crotonville. It is one of the cornerstones of our culture and one of the institutions that makes GE work. Generations of GE leaders and customers will have the opportunity to benefit from Jack's vision and commitment. What A Fitting Tribute.
Jack left us a financially strong GE, as well as a culture that loves change This is important because the world we knew in the late 1990s -. A world of global growth, political stability and corporate trust - has changed The US economy began to. Slow IN 2000 and Entered A Recession In 2001. The World Followed, with europe and japan in decline.
That Was The Backdrop for the THRORST Attack on America That Left The Worldstunned. Among The Thousands Lost in this Tragedy Were Two Ge Employees. We mourn The loss of Janis Laseden and william Steckman.
The attack darkened the mood, deepened the recession and made economic recovery even more uncertain Two industries important to GE -. Airlines and insurance - were profoundly impacted, and we have rushed to support our customers - our friends in need - through this crisis, and we will continue to do so.The exuberance of the late 1990s and the inevitable downturn have created difficult times. Entire industries have collapsed, poor business models have been exposed, large companies have filed for bankruptcy and corporate credibility has been called into question.
In these difficult times, we see an opportunity to further differentiate GE. Turbulence challenges a company's character. GE is built to deliver in the most difficult environment, and it is built on trust. We delivered in 2001, and nothing builds trust like such consistent Performance.
GE Is A Resilient, Strong and Accountable Company. We believe That Our long-term Performance Differentiates Ge. This Performance is based on a welcome-defined business model.
We have a diverse portfolio of leading businesses; a stream of powerful Company-wide initiatives that drives growth and reduces cost; financial strength and Controllership that allow us to capitalize on opportunities through numerous cycles; and a set of common values that allows us to face Any environment with confidence.
Diverse Portfolio ... The dramatic global slowdown had an impact on our more economically sensitive short-cycle businesses such as Plastics, Lighting and Appliances. But the rest of GE flourished and grew. Our long-cycle businesses and GE Capital, which together contributed more than 75% of GE's revenues, set records. in particular, our Power Systems business had a fabulous year because of its global leadership in gas turbine technology and its ability to meet customer needs.The story behind our gas turbine success is worth telling. The seeds for our share gain were planted in the mid-1990s, when we invested in "F" turbine technology and acquired strategic global resources -! even though hardly anyone was buying Those were tough times for Power Systems, but because NBC and Plastics were booming, We Had the resources to take the long view - and invest for the fulure.
Now, as we work through this recession, our short-cycle businesses are investing strategically and improving their positions. They will ignite GE growth and performance through the next recovery. This is how and why GE delivers so consistently, year after year, in good . "" "" "" "" "" "" "" "" "" "" "" "" "" ""
Initiatives Impact ... Our initiatives helped us navigate in the rough economic waters of 2001. Globalization, for instance, is saving about $ 250 million a year through sourcing technical content and talent from around the world. Services continued to grow, increasing by 13%, an important factor for businesses like Transportation Systems, which grew revenues in 2001 despite shipping 20% fewer locomotives. A robust service business is a shock absorber when moving through business cycles. Six Sigma continues to bring us closer to the customer while growing our own productivity. In 2001, we completed more than 6,000 Six Sigma projects "At the Customer, For the Customer," meaning we literally took Six Sigma to our customers, working on very specific projects with them at their sites Digitization -. our newest initiative - is gaining ENORMOUS MOMENTUM. We generated $ 1.9 Billion of Incremental Cost Savings Through What We call "EVEN ON" EVEN ON A COMENTUM, EVEN ON A rainy day. This was the case in 2001. Moreover, all our initiatives add revenues, subtract costs and add value for customers.Financial Strength and Controllership ... GE generated over $ 17 billion of cash in 2001. This helped us maintain a return on average total capital of 27%, a staggering performance in this economy. We have a leadership team that recognizes the importance of earnings quality and cash management. We have more than 450 internal auditors who drive the sharing of best practices and a spirit of controllership. and our Cash Management Gives US The Ability To Be a "Buyer" During Periods of Crisis And Reduced Equity Values.
Visibility and Accountability ... GE performance is based on hard work. We review, refresh and manage our businesses constantly. We operate with intensity and transparency. Every day, more than 300,000 people around the world focus on creating and selling products and services in businesses they completely understand - businesses most of which we either invented or have been intimately involved with for decades We share a common set of values that dictates the actions of our leaders and shapes the character of our Company.This is a confusing time for investors Poorly.. defined "new economy" business models have cost people hundreds of billions. It is a time when consistent, excellent performance confuses some pundits, who then imply that it is "managed." It is almost as if an earnings "miss" would be more Virtuous Than Meeting Your Commitments During Tough Times - But That Is Not Ge. We Manage Business, NOT Earnings. Our Business Diversity, Initiatives, Financial Stregth and Values ENSU RE That We deliver On Our CommMitments.
If we were "just" an appliance or power systems or equipment finance company, we would have periodic down earnings years as those businesses go through their inevitable cycles. But instead, we have a diversified mix of leading industrial and financial businesses that together have demonstrated The Ability to Grow Through Cycle After Cycle.
Our businesses are closely integrated They share four leading-edge business initiatives: excellent financial disciplines and Controllership; a tradition of sharing talent and best practices; and a culture whose cornerstone is absolute, unyielding integrity Without these powerful ties, we actually could merit.. . the label "conglomerate" that people often inaccurately apply to us that word just does not apply to GE.Instead, what we have is a Company of diverse businesses whose sum truly is greater than the parts; a Company executing with excellence despite a brutal Global Economy to Deliver over $ 17 Billion of Cash Flow In 2001. Try "Managing" Your Way to Cash Flow of That Magnitude - Year After Year.
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GE has always been about the future. Customers buy from us, investors invest in us and employees work for us for where we are going, not where we have been. GE has a new leadership team at the top, but what is not new is Our commitment to perform.
The New Team Has Two Major Agenda Items:
Create a Lener, Faster, More Customer-Focused Ge Accelerate Growth ... Growth That Is High-Margin and Capital-Efficient
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After six years of total commitment to Six Sigma, we now have more than three dozen GE businesses speaking a common language, and it is the language of our leaders -. Present and future We have trained 80,000 people in Six Sigma and completed 500,000 projects, which have greatly improved our process capability throughout GE. We have invested $ 10 billion in information technology since 1998 to make Digitization a vital part of the Company. to GE, Digitization is the simplification of workflow, facilitated by the Internet. Six Sigma process excellence plus digital speed is changing the look of GE - smaller back rooms, faster decision-making in digital "cockpits" and increased customer-centricity and intimacy.Front Room / Back Room ... The Internet allows every company to have fewer, more efficient and higher- Value Jobs. AT GE, 60% of Our Resources Are In The "Front Room" - Customer-Facing, Growth-Driving, Manufacturing, Selling and ControllerShip. The Other 40% of Our Resources Are In The " back room "- supporting as well as compiling and passing information This will change Digitized companies in the 21st century will have significantly smaller back rooms with more resources committed to growth and customer success...
Digitization allows companies to change their shape, focusing only on those things that drive customer success, profit and growth. Across the Company, we will take out $ 10 billion of costs over the next three years. Six Sigma, combined with Digitization, will shape a Lener GE.
Digital Cockpits ... Digitization has made GE faster and allows us to constantly measure what we do Metrics -. Especially those 10 to 15 critical measurements that leaders need to run their businesses - are now online, real-time and shared by all.Digital cockpits have had a profound impact on Plastics, a complex business with customers and factories around the world. Our leadership team reviews 15 key operating metrics daily, using a globally consistent standard. cockpits contributed two points to productivity at Plastics in 2001.
DAILY AND Weekly - Rather Than Monthly or Quarterly - Our Business Leaders Are Making Course Corrections to Their Businesss, Saving Time and Money While Better Serving Our Customers.
Customer-Centricity ... The combination of Six Sigma and Digitization is taking us into our customers' workflow We are focused on three areas that make a difference to them:. Repeatable processes (span), sales force capacity and customer profitability.
You have heard us talk about span, the "evil" variance our customers feel in our response to their requests for delivery, service or financing. Reducing span remains one of GE's key goals. Our Appliances business has reduced span by 70%, allowing us to meet the most rigorous standards for rapid home delivery At Power Systems, as a result of Six Sigma process improvements, we have achieved a significant reduction in span on plant start-ups -. saving time and money for our customers.
We want to focus our initiatives on customer profitability This starts with a sales force that is trained to take Six Sigma to the customer It is backed with technology:.. Six Sigma-designed products to improve customer effectiveness or digitized Web applications to automate customer workflow .Our customers feel the difference We have more than 3,000 Six Sigma projects underway in the airline industry -. 1,500 since September 11 - which will achieve $ 400 million in savings for these customers who are contending with crisis and change This service to our customers will. Improve Our Long-Term Relationships As This Key Industry Rebounds.
Previous Annual Report letters have called GE a "growth company." This is clearly the case, as we have added $ 47 billion in revenue over the last five years. But it is important in these times of uncertainty and slow growth to reconfirm GE's purpose.
Can such a thing as a $ 126 billion growth company exist? It does exist, because GE always plays offense. We do not run this Company as a "$ 126 billion blob." We run it as an $ 8.4 billion Medical Systems business ... a $ 1 billion Ultrasound business within it ... and as seven separate operations within Ultrasound, ranging in size between $ 50 million and $ 250 million. These operations are run by people who are obsessed with growth and achieve it by creating new markets and technology. Backing them are our systems , our initiatives and a strong balance sheet that allows them to take risks for growth, knowing that the occasional miss or failure is not only unpunished, but is also "no big deal" in the context of a $ 126 billion company. Keys to success include :
Broader and Deeper Product Superiority ... Technical superiority is the Edisonian heritage of GE that we will never forsake -. In any business The proud history of this Company, and the key to its bright future, is the uninterrupted stream of innovative, technically advanced products and services - from the "F" and "H" turbines, to Discovery ™ LS medical diagnostic machines, to advanced ultrasound products, to pipeline monitoring software, to the GE90 engine, or even the Today show No one has the range or scale of. product and service innovation that GE has, and no one has its ability to maintain that superiority through financial swirls, economic storms, cycles and fads.Good things come to life when you achieve and maintain technical superiority in products and services. in Medical Systems, WE GET FASTER, HIGHER-Margin Growth; In Power Systems, We get Massive Growth IN Our Installed Base; AT Aircraft Engines, We win Hotly Contested Competitions. Technical Excellent Is A Linchpin of Ge's L ong-term growth strategy We plan to increase our Six Sigma-designed product launches by 25% in 2002. We will advance in new areas -. such as molecular imaging, distributed energy, advanced composites and sensors - with much of the research led by The GE Global Research Center, Which Will Begin A $ 100 Million Renovation and Will Be a hub for change and reinvigoration.
Services Excellence ... Our Services initiative continues to accelerate. Services revenue grew 13% to almost $ 19 billion in 2001. Our contractual service agreements have reached $ 60 billion. These are long-term, intimate customer commitments, where our rewards are tied to customer success. We have invested billions to upgrade our installed-base technology and have taken services from a wrench-turning maintenance activity to a knowledge-based business.The next evolution of service is in information technology. GE has created several billion-dollar service businesses based on improving customer workflow. Our Energy Management business helps customers manage power transmission on the existing grid. Our Healthcare IT business helps hospitals improve quality and lower cost. Both businesses are growing by 30% annually.
IT Offsets Cycles by Offering Long-Term Revenue Streams. It gets ger "on the sime side as the customer success tour"
Globalization ... GE has 41% of its sales outside the US, and increasing that level is another major part of our growth strategy. China represents a major opportunity for our industrial businesses. In a very short period of time, we expect that Medical Systems, Plastics, Power Systems and Aircraft Engines Each Will Be Doing More $ 1 Billion in Business In China.
We have built a terrific GE Europe as well - $ 26 billion in sales with 70,000 employees, many of them from former state-owned companies that we bought and turned around Europe continues to represent a prime opportunity for GE Capital..
GE is a global product company We will manufacture CT scanners in China and side-by-side refrigerators in Mexico, and we will provide administrative services and software from India -.. All with higher quality and lower costs Six Sigma is not confined to our US operations;. it is the practice and language of every facility we own in the world moreover, all of our global facilities operate under stringent environmental standards, and many have been recognized by government agencies for their environmental excellence.We see globalization from multiple angles WE CREATE STRONAL CAPABILISIES. WE CREATE STRONAL CAPABILITIES. WE CREATE STRONG People and Global Teams Who Want To Win - And Do Win.
Business Development ... GE has averaged 100 acquisitions for each of the last five years In 2001, regulators in Europe blocked our acquisition of Honeywell We disagreed with the reasoning -.. But quickly moved on, working with a pipeline of high-margin, high -growth, accretive acquisition opportunities We have entered the fast-growing security segment in Industrial Systems;. we have added to our offerings in Medical Systems; we have extended our capability in renewable energy and we are entering the equipment protection business in Specialty Materials. We announced the acquisition of Telemundo, which greatly enhances NBC's reach in the fastest-growing demographic in the US GE Capital has strengthened its position in mid-market, real estate and consumer financing, as well as in its global businesses. in today's difficult equity MARKETS, We See More Strateg Opportunities Than We Have Seen In a long time.
GE uses acquisitions to strengthen our positions in industries we have been in for years. We leverage Six Sigma in due diligence and integration to maximize returns. These acquisitions, made with financial and strategic discipline, have been accretive to our investors.We know that culture , business practices and values make GE different. We have leading-edge technology and we participate in multiple industries. We use our resources and our diversity to create value for investors.We believe in people.GE invests $ 1 billion per year in training. Leaders spend much of their time coaching, developing, evaluating and mentoring great people inside the most rigorous talent development process in industry. Our leaders have spent their careers in multiple industries, served on global assignments and lived through a wide range of economic cycles. We can Sit Around A Table On Any Set of Issues and Say "What do you think?" and arrive at a "Right Answer" ON MOST OF THE IMPORTANT ONES.
. We multiply ideas We do not merely invest in training or initiatives, we make these a crucible for broad-based Company change Six Sigma is the common language of GE;. Our Plastics business, for instance, often benefits an idea generated at from, Say, Appliances. Our Global Research Center Spreads Common Diagnostic Technology from Medical to Power To Aircraft Engines to Transportation. In this way, any good idea tents to become a big idea.
We share common values.Good people are attracted to a strong culture. Values bind GE together and give us confidence in the future. These values build on the traditions of performance, integrity and love of change. GE people know that performance does not stop with the numbers; it requires a personal commitment to excellence and a close linkage to the real world - particularly the customer's world.Let's summarize who we are GE is a 124-year-old large, multi-business company that is bound together by common. Systems of People Developments, INITIATIVES, FINANCIAL Management and ControllerShip - And Values. Ge Works. Ge is trusted - Because We Perform.
We view Today ... this Volatile, Tough, Global Economy ... as our very best day. We are Built to Play Offense and To Play It Now.
This Company is being transformed into a "Leaner, Faster, Customer-Focused Enterprise" ... one that has all the power of the digital age We are a $ 126 billion "Growth Company" -. A company that knows how to use size to propel consistent .
Great Ideas, And Great People Building Their Own Dreams At GE, WILL ENSURE THAT We Continue To Deliver.
Our Team IS Aligned With Investors. GE HAS One Agenda - Outperforming - And One Currency - Our Stock. When Totomers: Share Owners, Customers and Employees.
GE Is Grateful for your continuing trust and support. Our best days lie ahead.
February 15, 2002 Back to top Chinese
For GE, 2001 is a challenging year, but it is also a year of success. In the face of the most severe global economic environment and 9.11 tragedy of the 9.11 tragedy, we have experienced tests. GE's business model played a role. Our employees face these challenges that can be prolonged, so that GE's profit is much higher than the average of Standard & Poor 500, and it is more than 25 years. We have a lot of pride. Net profit increased by 11% and reached a record of $ 14.1 billion. The profits per share have also risen by 11%, while the average profit of Standard & Poor 500 has fallen by 20%. The sales revenue is $ 125.9 billion, from the book to 3% from 2000, but according to the comparable basic calculation is still over 4%. Industrial partial sales revenue increased by 6%.
The cash flow produced in the operation reached $ 17.2 billion, an increase of 12% over 2000. Deducting customer prepayment, cash flow is $ 13.8 billion, an increase of 13% over 2000. The business profit margin rose from 18.9% last year to 19.6% according to the basis of the basis; the annual average capital return is maintained at 27%.
Our stock prices have dropped 16%, slightly higher than the Standard & Poor's 500 stock index. Obviously, this is very disappointing. Despite this, investors with GE stock time reached 5 years (including 2001), and its return on investment reached an average of 21% per year. Those recognized GE is a long-term business company, with a 10-year-old person, an annual rate of return is 23%.
We increased by 13% in December. This is the increase in bonus in 26 consecutive years, and it is also an increase in two-digit increase in the decade. We have returned to $ 3.1 billion stocks as a good opportunity to buy. At this point, a total of $ 9.5 billion is given to our shareholders.
We announced a total value of $ 23 billion in 2001. The GE Financial Services Group has achieved a record of records, and the status of the medium-sized market financing and the real estate market is more consolidated. Our Power System Group, Medical Systems Group and Industrial System Group add new platforms. NBC's acquisition of Telemundo makes us access to the fastest growing Spanish media market in the United States.
Our company has a great leader who has achieved a smooth transition to the new management team. 175 of 575 high-level leaders have been promoted, and it is again suggested that the joining GE, and the infinite opportunities brought about by GE Time. Among the vice president of newly promoted company, 40% continued to be updated for women, ethnic minorities and non-American and GE.
The company responded quickly to 9.11 events. GE family provides a $ 25 million assistance, including cash and services. The GE Foundation donated $ 10 million to the World Trade Shuangtu Foundation. 20,000 GE employees donated $ 2.5 million to the Red Cross, and the GE Foundation matched the donation of employees at a ratio of 1 to 1, donated to the Red Cross.
Within 48 hours after the incident, our Power System Group has shipped 80 mobile generators to the lower Manhattan area. Our medical system group quickly transported mobile CT and magnetic resonance scanners to some hospitals recently left from the accident. GE staff worked tirelessly in the World Trade Center, many of them were volunteer firefighters. We are proud of our team and their huge achievements. GE continues to be the world's most approved company - "The most respected company" in the "Fortune" magazine has been selected for the fifth consecutive year, and is the fourth time being selected as "the world's most respected company" .
Times of change
2001 is a transitional year for GE. On behalf of our shareholders, customers and employees, I would like to thank Jack. Welge 40 years to contribute to GE. Jack has personal influence on thousands of people around the world. In his 21-year GE chairman, he has a profound impact on GE. Jack has a lot of talents worthy. But he is first a tutor. In view of this, we re-named the School of Management in Clairton Village as "John F. Welge Leading Development". 5,000 GE employees each year and customers from global came to the development college work and study. It is a cornerstone of our culture, one of a mechanism that makes GE becomes GE. A generation of GE leaders and customers will have the opportunity to benefit from Jack's vision and efforts. How much it is, it expresses our respect for him! Jack gave us a GE with solid financial strength, as well as a company culture that loves change. This is very important, because the world is now different from the world in the second half of the 1990s - that is a global growth, political stability and the company's trust. The US economy slowed down in the second half of 2000 and entered the recession in 2001. Following Europe and Japan, the world economy has fallen into a trough.
In this context, terrorists launched a horror attack in the United States. Two people have two employees in millions of people. Let us mourn for Janis Lasden and William Steckman.
The terrorist attack makes the market atmosphere more bleak, adding the recession, and makes the prospects for economic recovery more uncertain. GE two important industries - aviation and insurance - are affected, and we quickly provide our customers in this crisis - we urgently need help, we will continue to do so.
The rapid development of the second half of the 1990s and the lattice of the inevitable low cereals is very serious. Some industries have a comprehensive collapse, and the uncomfortable business model is exposed. Many companies apply for bankruptcy, and people have doubts about the credibility of the business community.
In this difficult moment, we see the opportunity to further make GE. The turmoil can test a company's character. Regardless of the environment, GE has enabled promise, which is based on trust. We have implemented commitments in 2001, nothing more than consistent performance, more than a good trust.
How to achieve commitment
GE is a company with endurance, strong and trustworthy. We believe that the company's long-term expressment makes GE different. This manifestation is based on the clear business model.
We have a multi-business combination consisting of leading business groups; a strong strategic growth initiative to promote growth and reduce costs; solid financial strength and financial control system make us use the economic cycle Opportunity; and a set of common values, so that we are confident in any environment. Multi-service combination ... The global economy fell to some short-term sectors that are more sensitive to economic environments, such as plastic groups, lighting groups and home appliances groups have affected. But the other departments of GE are thriving, sustainable. Our long-term sector and GE Financial Services Group have achieved historical growth, and GE has 75% of income from these departments. It is more prominent that our power system group has achieved excellent performance last year, mainly because of its leading position in the global market, and its ability to adapt to customer needs.
The success story of our gas turbine is worth mentioning. The seeds of our market share are planted in the mid-1990s, when we invest in "F" gas turbine technology, and acquired strategic global resources - although there are almost no buyers at that time! For the Power System Group, it is a difficult day, but because the NBC and the Plastics Group flourished, we have resources to support our long-term strategy - investment in future investment.
Now, when we are exhausted this recession, our short-term business unit is in strategic investment and is improving its status in the industry. They will inspire GE growth and performance until the economic recovery is coming. This is the reason why I can implement my commitment in the case of the situation, and how to achieve my commitment in the year. GE can achieve performance goals in any environment. The strategic development initiative has an impact ... Our strategic development initiatives help us spend a smooth sail in the 2001 economic field. For example, globalization, through the procurement of technical products and recruits in a global scale, saving us $ 250 million in a year. The service business continues to grow, the growth rate is 13%, which is an important development factor for the department like the transportation system group, which enables revenue growth in the case where the traffic of the locomotive is reduced by 20%. Six Sigma continued to make us closer to our customers and improve our own productivity. In 2001, we have completed six Sigma projects of 6,000 "Based on customers, service customers", which means that we do bring six Sigma to our customers, and work together on the spot. Digital - our latest initiative - is in full swing. Through "Electronic Manufacturing" and "Electronic Purchase", we have reduced $ 1.9 billion in cost. Strategic initiatives make the company's growth momentum, even in difficult days. This is the case in 2001. More importantly, all of our strategic development initiatives have increased income, cutting costs and adding value to customers.
Financial power and control system ... GE produces $ 17 billion in cash flow in 2001, which allows us to maintain an average of 27% of the return on assets. In the environment where the overall economy is not booming, this performance is really good. We have a leading team that fully recognizes the importance of profitability and cash flow control. We have more than 450 internal auditors who promote the best practices and implement a rigorous financial control system. Our cash flow management makes us have the ability to become a "buyer" during the crisis and equity depreciation period.
Visibility and credibility ... GE's performance is based on efforts. We are always inspected, updated and managed our business units. Our business adheres to the principle of efforts and transparency. Every day, 300,000 employees around the world have duty, strive to produce and sell their products and business - most of these business, or by we have been closely involved in decades. We share a set of values, guiding our leadership action and shaping our company's character.
This is an era that makes investors confused. The unknown "new economic" business model consumed hundreds of billions of dollars in wealth. This is a continuous, excellent performance will make the students confused, and they will imply that these performances are "human manipulation." In a difficult environment, it seems that profit "is inferior" is far more straightforward than achieving your commitment - but this is not GE. Our manipulation is our business, not our profit. Our business diversity, our development initiatives, our financial strength and values ensures that we have achieved our commitment.
If we are "just" is a household appliance or power equipment or equipment rental company, we may have a profitable trough in some years, as these business itself cannot avoid periodicity. On the contrary, we have a diverse leading industrial sector and financial business units, which combinedly showed the ability of the economic cycle, we can always achieve growth.
Our business departments are closely combined to share four advanced business initiatives: excellent financial discipline and control system; share traditions of tactries and best practices; and a common corporate culture, its fundamental cornerstone is always firm Integrity. Without these strong links, we can indeed be incorrectly used to describe our "United Da". This name is not in line with GE.
Instead, we are a company with diversified business, its overall sum is greater than the various parts; a company in the face of harsh global economic environment still achieves $ 17 billion in cash flow in 2001 in 2001. Try it, is it possible to have a year of "manipulating" such a cash flow in such a year. Some companies have different people, we believe that GE is the unique company, and one of the reasons why GE is so beautiful, we can do its commitment. This is GE.
GE direction
GE will always focus on the future. Customers buy our products and services, investors invest us, employees are trying to our future, rather than our past performance. GE existing leadership team is new, but our commitment to performance will be as always.
There are two main contents of the new leadership team: § Create a more intensive, faster, more wholeheartedly to serve the customer service, accelerated growth ... achieve high profit margin and high capital efficiency growth
The basis of this action plan is GE's strategic development initiatives and financial strength, which creates a larger return for investors.
More exciting, faster, and more wholeheartedly serve customers
After six years of full investment in Six Sigma, we now have more than 36 business units to communicate with a common language. This is the language of our leaders - now and even in the future. We have conducted six Sigma training for 80,000 employees, completed 500,000 projects, which greatly increased the process capacity within GE. We have invested $ 10 billion in information technology since 1998, making digital components. For GE, digitization means simplifying the workflow pushed by the Internet. Six Sigma Excellence Process plus digital speed is changing the face of GE - more exciting logistics, using faster decisions made by digital cabins, more customer-centered and more closely related to customers. Frontline / logistics ... The Internet has made all company positions, but at the same time improve efficiency and improve value. In GE, our 60% resource is concentrated in "front" - facing customers, promoting growth, manufacturing, sales, and financial control. Another 40% in logistics - support, and write and disseminate information. This situation will change. The logistics of digital companies in the 21st century smaller size, more resources will be used to achieve growth and promote customer success.
Digitally can change the company's structure and let them commit their success, profit and growth. In the next three years, we will invest 10 billion US dollars within the company. Six Sigma combined with digitization will shape a more exciting GE.
Digital cabin ... Digitalification GE speed faster, can be checked at any time. Measurement Standards - In particular, leaders manage the 10 to 15 key indicators required for their respective business groups - realize online, real-time and all-in-one sharing.
The digital cabin has far-reaching the plastics group, and the group's customers and plants are all over the world. Our leadership checks 15 key indicators using global unified standards every day. The digital cabin has contributed two percentage points to the productivity of the plastic group 2001.
Every day, every week - not every month or every quarter - our business group leaders amend their business development track, save time and money, and provide customers with better service.
Customer-centric ... Six Sigma and digital combinations are brought into our client's workflow. We concentrate on three areas that can make them different areas: repeatable processes (spans), sales staff and customer profitability.
You have heard that we discuss "span", which refers to the customer's "absurd" variables that our delivery, service or financing. Reducing the span is still one of the key objectives of GE. Our home appliance group has cut 70% of spans, so that we can meet the most demanding standards in fast delivery. In the power system group, with the improvement of Six Sigma to the process, we have sharply cut the span of the new factory - saving time and money for our customers.
We have to concentrate on our customers' profitability. This first starts from the sales staff, they are trained to bring six Sigma. They have technical support: products designed according to six Sigma standard will improve customer efficiency, digital network applications will make customer workflow automation. Our customers feel changes. We are implementing more than 3,000 six Sigma projects in the aviation industry - 1500 are implemented after 9.11 - this will save $ 400 million for customers who are dealing with crises and changes. As this key industry welcomes recovery, our service to our customers will improve our long-term relationships.
Accelerated growth
In the case of the previous year, it was called "growth company". This is true, and we have achieved $ 47 billion in revenue growth in the past five years. But the value of this economic prospect is very important, and reiterates the goal of GE again. 126 billion US dollars growth companies - can such things exist? Can, because GE has always taken the initiative. We don't manage the company as a "126 billion US dollars". We regarded management of $ 8.4 billion in medical system ... Among them, $ 1 billion ultrasound department ... and seven sizes under the ultrasound department from $ 50 million to $ 250 million in small sectors. These small sectors are managed by those who are growing, and they achieve growth by creating new markets and new technologies. Supporting them is our system, our growth initiatives and solid financial strength, so that they can bear the risks brought by growth, know that accidental negligence or failure not only will punish punishment, but also for a $ 126 billion company It is "little meaning". Successful elements include:
More profound product advantages ... The technical advantage is that Edison left the heritage of GE, we will never abandon - no matter which business department. The continuous innovation and technical advanced products and services of a pulse are the company's proud tradition, and it is the key to our future success - from "F" type and "H" gas machine, to Discovery? LS medical diagnostic instrument, to advanced Ultrasonic products, to pipe monitoring software, to GE90 engines, and even "Today" TV shows. GE's product range and service innovation is unparalleled, and the financial swirls, economic storms, recession cycles and trends have still maintained this advantage.
If you can achieve and maintain absolute technical advantages in terms of product and service, good things come naturally. In the medical system group, we have achieved a higher growth rate; in the Power System Group, we achieve large-scale growth on the installed equipment; in the aircraft engine group, we win in the fierce competition. Excellent technology is a tie for long-term growth of GE. We plan to increase 25% in 2002, new products designed in six Sigma will increase by 25%. We will enter new areas, such as molecular imaging, energy distribution, advanced composite materials and detectors - many research projects will be led by the GE Global Research Center. The Research Center will not be a total value of $ 100 million in decoration projects, and will become the centralization of change, so that the company glows youth. Excellent service ... Our service initiative continues to accelerate. Service revenue increased by 13% in 2001 to nearly $ 19 billion. Our service agreement contract has reached $ 60 billion. These are long-term, close customer commitments, our return is a successful customer. We have invested billions of dollars to update the technology of the installed equipment, and transform the maintenance from the moving wrist into a knowledge-based business.
The next evolution of the service occurs in the field of information technology. GE has created billions of dollars in service business on improving customer workflow. Our energy management business helps customers manage power transmission on existing power grids. Our Healthcare IT business helps hospitals improve quality and reduce costs. Two business annual growth rates are at 30%.
Our service capabilities cannot be underestimated. The long-term income brought by the service buffers the impact of the economic cycle, and the GE can "stand in the customer" by combining customers with our own future success. Globalization ... GE has 41% of sales from the United States, and improves the other important part of our growth strategy in this regard. China is a very important opportunity for our industrial sector. In a short period of time, we expect medical system groups, plastic groups, power system groups and aircraft engine groups to sell more than $ 1 billion in China's sales revenue. We also built an excellent GE Europe - 70,000 employees to achieve a sales of $ 26 billion, many of them from our purchase and transformation. Europe also means the best opportunity for GE Financial Services Group.
GE is a global product company. We have manufactured CT scanners in China, which is produced in Mexico to open the refrigerator, providing management services and software from India to improve, and cost is reduced. Six Sigma is not limited to our department in the United States; it is our common practice and language in every branch office around the world. In addition, we have followed the most stringent environmental standards around the world, and many factories are subject to government departments due to the excellent work of environmental protection.
We look global from a multi-angle. We support our customers around the world. We invest in global capabilities. We have built a strong global team that they are eager to win - and they are really winning.
Business development ... In the past 5 years, GE has an average of more than 100 acquisitions per year. In 2001, European regulatory agencies prevent us from acquiring Honeywell. We don't agree with their logic - but we quickly continue to travel, seize other competition opportunities for high-profit margins, high growth and value-added. Our industrial system group has entered a rapidly growing security field; our medical system group has added products and services; we extended the ability in renewable energy, and our special material group also entered the equipment protection business. We announced the acquisition of Telemundo, which greatly enhanced the influence of NBC's fastest growing population. The GE Financial Services Group consolidates its status in medium-sized markets, real estate and consumer financing markets, and strengthens its global business. In the face of the current difficult capital market, we have found more strategic opportunities that have not arisen. GE uses the acquisition to consolidate the status of some have entered the industry. We use six Sigma in prudent investigations to maximize rewards with integration. These have brought more value to our investors in accordance with strict financial and strategic planning.
Cultural is critical
We know that cultural, business practices and values, and the GE is so different. We have advanced technology, we participate in a variety of industries. We use their own resources and diversification to create value for investors.
We believe in employees. GE invests $ 1 billion annually for training. Most of the leaders used to teach, develop, assess and promote excellent talents, which is the most rigorous talent development process in the industry. Our leaders have spent their careers in different industries. They have experienced many of the economic challenges in a global job. We can sit together to discuss any issues, ask questions? Quot; How do you see this problem? ", Almost always give" correct answers "on important issues. We spread concepts. We are not only for investment in training or development, we will also have a large-scale incubator for the company. Six Sigma is GE Common language; for example, our plastics group often benefit from a creative from the home appliance group. Our Global Research Center disseminates a common imaging diagnostic technology, scope from the Medical System Group to the Power System Group, to the aircraft engine group, Go to the transportation group. In this way, any good idea can share it.
We share common culture. Powerful cultural will attract outstanding talents. Values will condense GE as a whole, give us a confidence in the future. These values are established on the tradition of value, adhere to integrity and love change. GE people understand that performance is not only a number, which requires a promise of excellence and close contact with the real world - especially with the world of customers.
Let us summarize yourself. GE is a multi-industry company with 124 years of history, maintaining its bond is a common manpower development system, strategic development initiative, financial management and financial control system - and values. GE is effective. GE is trustworthy - because our performance is proud. A promising company we look today ... turbulent, severe global economy ... for our best opportunities. We have never taken the initiative to attack now.
This company is transforming into a "more intensive, faster, more wholehealth for customers" ... a company with all the strengths of the digital era. We are a "growth company" of a year of sales revenue reached US $ 126 billion - a company that knows how to use large-scale promotion, high profit margin growth. GE is a company that you can trust, which achieves excellent profit targets with unparalleled integrity and transparency in the world.
Great creativity and excellent talents create their dreams in GE to ensure that GE can continue to achieve commitment.
Our team is in front of the investor. GE has a program of action - extraordinary performance - and a currency - our stock. When the company wins, we win together, whether it is shareholder, customer or employee.
GE Thank you for your trust and support. Our brilliance is still in front.
Jeff. Chairman, Chairman and CEO, Rogers, Vice Chairman and Executive Officer, Vice Chairman and Executive Officer, Vice Chairman of Danmean
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